5 Reasons You Were Denied Renters Insurance

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  • Rental insurance companies can deny applications if they feel the applicant or the property is too risky to insure.
  • Just because one insurance company denies a renter doesn't mean that others will.

They might not seem like much to you, but these are big red flags to insurers.

Renters insurance isn't as complex as other types of insurance, and it's not too difficult for most people to get. This type of policy provides important liability protection for the renter, not to mention coverage for their personal property. But every application is not guaranteed to be approved. Here's a look at five common reasons an insurance company might deny a renter's application.

1. Location issues

The location of a home or apartment affects its risk of natural disasters. Renters insurance companies evaluate the likelihood of all sorts of natural disasters when setting premium costs. The same is true for homeowners insurance. Policies for higher-risk areas usually cost more because there's an increased risk the insurer will have to pay out a claim. And if the risk is too high, the company might refuse to underwrite the policy altogether.

For example, if a home or ground-floor apartment is located very near the coast in a region prone to severe flooding, that might make a company wary of insuring it. The same goes for a rural home that's far from the nearest fire station. If the rental were to flood or catch fire, the insurer would have to pay out a massive claim for the renter's belongings that were damaged or destroyed in the accident.

2. Home hazards

Certain items, like pools or trampolines, are considered safety hazards and can raise the cost of insurance. A pool may not be an issue for a renter if it's a community pool run by the landlord. But if someone is renting a private home with a pool, insurance companies might get worried.

If the renter were to invite guests over and the guest were to injure themselves, they could sue the renter. The renter would then have to fall back on their renters insurance's liability coverage, which could lead to a massive claim.

3. Pets

Renters need to clear their pets with more than just their landlord. Insurance companies usually want to know about them too. Certain dog breeds are known for being more aggressive and are more likely to bite people than others. This is another situation that could lead to huge liability claims against the insurance company.

Some companies may get around this by offering to sell the renter insurance with a dog bite exception. This means that the company will pay out other sorts of liability claims, but it won't pay for any dog bite claims.

4. Prior rental insurance claims

As with any type of insurance, the more claims the policyholder has filed in the past, the more expensive their policy will become. And if they file too many claims, they may struggle to get coverage at all. Several rental insurance claims filed within a few years suggest the renter may not be responsible or that they take unnecessary risks.

Usually, when filling out a renters insurance application, companies will ask for a claims history for the previous three to five years. Exact requirements may vary depending on the state and the insurance company. Most insurers will want to know what type of claim the applicant filed, when it was filed, and how severe the incident was.

5. Lapsed coverage

Renters who previously had renters insurance but allowed their coverage to lapse may have difficulty securing new coverage. A lapsed policy suggests that the individual may not be responsible and may not be able to keep up with their payments in the future. This is a major red flag to insurance companies, which do all they can to minimize risk to themselves.

But just because one company denies an applicant doesn't mean they all will. The best move for a renter who's denied coverage is to explore other options. Check with a few other companies and compare rates side by side to see which offers the best deal.

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There are many homeowners insurance companies to choose from. We’ve researched dozens of options and short-listed our favorites here. Looking for a green build discount or easy bundle policies? Want an easy-to-use interface? Read our free expert review and get a quote today.

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